Special Report: Light Rail

LRT Funding Forecast Still Hazy

With so little still known about the funding details of Hamilton's LRT project, the danger is that any Council discussion at this point would be driven by confusion and fear of the unknown.

By Nicholas Kevlahan
Published August 24, 2012

Hamilton Mayor Bob Bratina's recent statement to CBC that Bob Chiarelli, Ontario's Minister of Infrastructure and Transportation, had confirmed "that there will be participation expected from the host community" for projects funded by Metrolinx is not news, and I'm not sure why the Mayor felt "relieved" to be able to report this.

Rendering of B-Line LRT
Rendering of B-Line LRT

Ever since the Liberals announced in the Fall of 2007 that they intended to fund two rapid transit lines in Hamilton, we have known that Hamilton would have to contribute at least some share of the costs.

This has been confirmed repeatedly, in November 2008 when then Metrolinx Chair Rob MacIsaac said that Metrolinx is prepared "to pay the lion's share" of the capital costs, and later when Metrolinx confirmed that they would pay 100 percent of a bare-bones LRT, but that Hamilton would need to pay for associated infrastructure upgrades and extras.

I was a member of the Rapid Transit Citizen's Advisory Committee in 2010-2011, which gave members of the public an opportunity to participate directly in the LRT planning process.

We spent several meetings learning how staff were estimating the costs that Hamilton would likely need to contribute to the LRT project.

100% Direct Capital Costs

On the basis of consultations with Metrolinx, and following the experience of other Metrolinx-funded projects, staff assumed that Metrolinx would pay 100 percent of the direct costs of the LRT (e.g. building the line, maintenance yard and buying the rolling stock).

However, Hamilton would have to pay for things like replacing water mains, power lines, rebuilding sidewalks, changing traffic layouts, replacing street furniture and possibly some of the operating costs (although Metrolinx later announced they would own and operate the system).

Of course, it is a matter of negotiation what actually constitutes direct and indirect costs, and so staff were carefully evaluating all necessary work to determine what could be justified as direct costs.

As an example, if a water main had just been replaced and needed to be changed again as a result of building the LRT, this work would be a direct cost paid by Metrolinx. But moving a 20-year old line would be an indirect cost paid by the City.

On October 13, 2011 The Spectator reported on the staff funding report that was presented to Council. This report gave some rough estimates on what the City might be expected to pay for LRT construction and operation (anything from $42 to $230 per household), but did consider new revenue sources.

Long-Term Funding

A related question, which has still not been answered, is how Metrolinx is going to fund its $50 billion MoveOntario 2020 plan.

The Province has so far only funded about 20 percent of the total cost, from general taxes, and plans that the balance will be found from new targeted revenue sources.

Unlike other jurisdictions, Ontario currently relies almost exclusively on municipal property taxes and general provincial income and sales taxes to fund transit. This makes it difficult to fund big transit infrastructure projects sustainably.

Based on what has been done elsewhere, it is pretty clear what sort of new targeted revenue sources the Province could draw on to fund transit: fuel taxes, employment taxes, parking levies, building charges, road tolls, congestion charges and sales taxes.

At the municipal level, the Province is piloting tax increment financing to allow municipalities to finance transit infrastructure by borrowing against future property tax gains, as is done in the USA.

Metrolinx will finally present a report on alternative revenue streams in June 2013 (even though two-thirds of the projects were supposed to be completed by 2015). However, it is obvious that every one of these alternative revenue sources will be politically sensitive, which is why it has taken so long for Metrolinx to come up with a sustainable financing plan.

Costs Still Unknown

So, the fact that Hamilton will need to pay something towards its LRT project is not news. It is also not news that the Province will need to look at new revenue streams to fund its portion of the new transit projects proposed in MoveOntario 2020.

What is surprising is Bratina's reaction that we "will now hear a much more focused discussion" on the LRT project.

How can Council have a more focused discussion when nothing at all about the project and its financing is clear?

Will Hamilton be allowed to use tax increment financing? Could we implement a local parking levy? Could we implement a local employment or sales tax?

With so little known about Hamilton's LRT project, the danger is that any Council discussion at this point would be driven by confusion and fear of the unknown.

Council Next Steps

Agreeing to contribute nothing towards building and operating our LRT system was a prudent opening position for Council, given how little we know about the project and its financing.

However, the February 2010 Metrolinx Benefits Case Analysis concluded that an investment in LRT would generate a significant net benefit.

Hamilton will gain nearly all the benefit, even though under any reasonable scenario the Province will pay the majority of the total cost. Surely Council will consider benefits as well as costs when making such an important decision?

The time to have a focused discussion is when the Province and Metrolinx have given us something concrete to discuss. Until then, as the Mayor has suggested in the past, we should continue to let the process follow its course.

Nicholas Kevlahan was born and raised in Vancouver, and then spent eight years in England and France before returning to Canada in 1998. He has been a Hamiltonian since then, and is a strong believer in the potential of this city. Although he spends most of his time as a mathematician, he is also a passionate amateur urbanist and a fan of good design. You can often spot him strolling the streets of the downtown, shopping at the Market. Nicholas is the spokesperson for Hamilton Light Rail.

32 Comments

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By Robert D (anonymous) | Posted August 24, 2012 at 08:00:16

On the one hand I agree discussion at council is premature given all the unknowns.

On the other hand I think we do need to be discussing, lobbying, and showing support for LRT to the province - otherwise other municipalities closer to the GTA will receive funding before us because they have "bigger transportation issues".

We need to show the province we're ready willing and able to QUICLY discuss and decide on LRT when the time comes.

If we present a neutral face, and spend 18 months discussing this in council the money is going elsewhere.

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By champion (anonymous) | Posted August 24, 2012 at 08:14:26 in reply to Comment 80029

Exactly. Regardless of what Bratina says Hamilton needs an LRT Champion to make sure the province knows we're not going to sit back and get screwed over. Instead he seems to be doing everything he can to let the province off the hook!

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By jason (registered) | Posted August 24, 2012 at 10:48:44

Unless Hamiltonians vote for a mayor/council with vision and leadership next election, I fear these nice renderings of LRT is as close as we'll ever come to seeing them on our streets. I'm sure hoping the casino issue is settled by then so we don't end up with another election hi-jacked by a side-show.

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By Steve (registered) | Posted August 24, 2012 at 15:12:25 in reply to Comment 80032

I wouldn't count on vision and leadership on council.

Based on voter past performance I don't expect any wholesale changes around council chambers. Perhaps one, maybe two but that's about all.

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By ThisIsOurHamilton (registered) - website | Posted August 24, 2012 at 20:40:03 in reply to Comment 80048

Based on voter past performance I don't expect any wholesale changes around council chambers. Perhaps one, maybe two but that's about all.

Yup. (And two is pushing it.)

http://thisisourhamilton.ca/?p=1493

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By Kiely (registered) | Posted August 24, 2012 at 10:59:06

The province just doesn't have the money unless the Liberals raise taxes and that will be the death of them in the next election; unless Hudak craps the bed AGAIN, which is unlikely. Unfortunately this has become a political issue not a transportation one and sadly we will suffer for it.

The only real concern for governments in power is to keep power, they're not going to fall on their swords for us to get an LRT.

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By kevlahan (registered) | Posted August 24, 2012 at 11:20:21 in reply to Comment 80033

But they did give Toronto (several) LRT lines, and K-W is getting a line. Why would Hamilton deserve less? Why would we think we deserve less?

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By Kiely (registered) | Posted August 26, 2012 at 14:56:39 in reply to Comment 80036

We don't deserve less Kev' we just appear to be easier to say "No" to... for many different reasons.

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By TreyS (registered) | Posted August 25, 2012 at 20:48:35 in reply to Comment 80036

Because we blindly vote NDP and nothing else.

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By JM (registered) | Posted August 24, 2012 at 13:36:14 in reply to Comment 80036

K-W's is funded by the feds. nothing to do with metrolinx..... i think

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By kevlahan (registered) | Posted August 24, 2012 at 14:16:28 in reply to Comment 80041

The Province will fund up to two-thirds of the total cost, and it is really the willingness of the Province to fund Hamilton's LRT that is the issue, not who will manage the project.

As I mentioned Metrolinx and the City have already established that the total cost of Hamilton's LRT would have a net benefit and that the project is technically feasible.

The only remaining question is whether it gets the funds, when and how much.

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By Kink (anonymous) | Posted August 24, 2012 at 19:43:17 in reply to Comment 80043

Two-thirds funding worked a charm on Randle Reef, and the city only had to come up with $30 million at one point. I have a very hard time imagining the same squad coming up with 7-10 times that amount. Unless maybe this LRT line would run to Aerotropolis...

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By jason (registered) | Posted August 24, 2012 at 11:57:10 in reply to Comment 80036

we're getting a massive freeway cloverleaf to nowhere. They know their constituents apparently.

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By LOL (registered) | Posted August 24, 2012 at 11:02:33

It does not matter which pocket the money comes from, in the end it comes out of the taxpayers pocket. We just cannot afford to throw a billion dollars at LRT. The province is struggling to pay its way, the city is struggling to pay its way, and mostly it is the taxpayers who are struggling to pay their way. If we decide to upgrade transit in the city it must be done in the most economical way possible.

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By kevlahan (registered) | Posted August 24, 2012 at 11:18:54 in reply to Comment 80034

That's where the net benefit case analysis comes in: the taxpayers get more back in terms of increased economic activity and social benefits than they invest.

The argument is precisely that investing in LRT is "the most economical way possible", because it leverages in existing infrastructure investments. An example of non-economical investment would be the Aerotropolis or greenfield sprawl.

If you are really against spending lots of money on transport infrastructure, we should immediately stop building and maintaining our roads and highways, stop upgrades to airports. We are spending billions of dollars right now on these things, but I would argue we are not getting a good return on investment (negative return for investment in new roads and utilities for sprawl, in fact).

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By CaptainKirk (anonymous) | Posted August 24, 2012 at 14:07:34 in reply to Comment 80035

Based on the net benefit case analysis, the question should not be, "Can we afford this?"

The question should be, "Can we afford not to do this?"

The older part of this city needs help. This can be transformative. Is there any other way to "fix" the older part of the city?

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By Today (anonymous) | Posted August 24, 2012 at 14:41:01

Some program to subsidize people who are willing to live in the older part of the city and fix up a run down building to actually live in. No easy anawers that is for sure. Would LRT help with this? I don't know to be honest.

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By LoveIt (anonymous) | Posted August 24, 2012 at 22:07:12 in reply to Comment 80044

LRT or not, older parts of the city already getting fixed.
Just check the number of dumpsters in Stinson neigbourhood, for example.
Check again in 2-3 years. It transforms constantly.

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By DownTownDowner (anonymous) | Posted August 24, 2012 at 18:42:14

Would a B Line transit work in hamilton really? In KW they colleges and universities that crisscross the city and they are needed to moved people. We don't have any higher learner centers here that would benefit.

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By DrAwesomesauce (registered) | Posted August 24, 2012 at 20:14:15 in reply to Comment 80050

?????????

In Hamilton, people argue against anything and everything and using the most peculiar rationale.

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By theOther (registered) | Posted August 24, 2012 at 20:00:30 in reply to Comment 80050

"..[T]he city...?" In fact, 'KW' is two cities sitting side-by-each. I know there are three instiutions of higher learning situated along the same street in Waterloo, two virtually across the road from one another, and the college building a kilometre or so to the east. You could likely service the transit demand for those schools with existing bus service, a bicycle fleet, moving sidewalks or beer-bottles on sticks. Pity that between Mac and Mohawk, there are no opportunities for higher learners here in Hamilton. Hence no requirement for light-rail transit. Duh... Thanks for staying with this, Nicholas.

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By LOL (registered) | Posted August 26, 2012 at 04:42:13 in reply to Comment 80053

Why would we need transit between 2 institutions of higher education? Not a lot of people need to get from Mohawk to Mac. I have heard a lot of nonsense trying to justify money spending on transit this is one of the silliest ones yet.

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By DowntownDowner (anonymous) | Posted August 26, 2012 at 09:57:05 in reply to Comment 80073

Who said anything about going from 'Mac to Mohawk.? It refers to people going from their homes to those locations. Has anyone looked at the current B Line? It skips a huge middle section of the city. Bus driver told me they refer to Wentworth to Hughson as Scooter City and they would take up too much room on the express.

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By CaptainKirk (anonymous) | Posted August 24, 2012 at 19:29:24

Have you read the Metrolinx Benefits Case Analysis that is mentioned, and linked to, in the article?

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By ThisIsOurHamilton (registered) - website | Posted August 24, 2012 at 20:41:52

...and I'm not sure why the Mayor felt "relieved" to be able to report this.

"Although the message was disappointing, it was somewhat of a relief to finally hear a clear statement from the minister that there will be participation expected from the host community. Too much speculation along the way, too many negative assumptions were poisoning what has been an incredibly positive, constructive process for us, as witnessed by Metrolinx's assessment of Hamilton's LRT due diligence. So we're disappointed, but as GI Joe says, 'Knowing is half the battle.' "

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By Loco-Motive Breath (anonymous) | Posted August 25, 2012 at 07:22:15

LRT = Let's Raise Taxes

Good luck funding and finding a champion!

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By jason (registered) | Posted August 25, 2012 at 10:42:07 in reply to Comment 80060

actually, LRT is proven to reap huge returns on investment. Tax revenue skyrockets as businesses start investing along the routes and near the stations. Don't be fooled by the 'experts' at city hall who always tell us that businesses don't want congestion, but instead want free-flowing highways like Cannon and Main. It's bunk. If it was true, businesses would be killing each other to locate on Cannon and Main....instead, they are falling all over themselves to find any suitable space to shoehorn themselves in on Queen and King in Toronto. They'd rather have an obscure, 4th floor, down long hallways location on Queen West than have prime street frontange on Main St in Hamilton...or on Adelaide or Richmond in TO if you prefer a straight-up apples to apples comparison.

Business wants vibrancy, people, interactions and when I say congestion I don't mean gridlock or traffic at a standstill...I mean something more akin to James North or Queen West. Hamilton city hall is 100% wrong on this issue, and would see massive tax income coming their way by investing in a proper LRT system across the city and bringing balance back to our downtown streets. Even our two-way conversions are done wrong. Wilson and Cannon should be parking on both sides, bike lanes both ways and 1 lane each direction for cars. Instead we convert Wilson to 4 live lanes, 2-way and as a result traffic still roars through downtown during rush hour. The status quo sure isn't working...even the biggest hater/squelcher can't deny that.

Comment edited by jason on 2012-08-25 10:44:10

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By WRCU2 (registered) - website | Posted August 27, 2012 at 07:25:53 in reply to Comment 80064

Tax revenue skyrockets,,,

(Shakes Head) That's exactly what he(I) said Jason, but the cart is in front of the horse because funding your LRT means Let's Raise Taxes first!

I've got a better idea and a new acronym to boot. LRT = Low Risk Transit and this one is a hoot:
Horse And Buggy

Rapid transit of this sort is exactly what we need, when we put the cart behind the horse we can guarantee his speed. Meanwhile breeders in Flamboro can breath a sigh of relief because even if they lose their casino and track we'll have a need for fast-backs in this city!

Cheers

Comment edited by WRCU2 on 2012-08-27 07:37:56

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By mainstreet (anonymous) | Posted August 25, 2012 at 08:53:34

this project will raise the market value assessment on all properties that are closest to the LRT.Not the actual market value of those properties.If homeowners cant move out in time,they will lose much of the value of their homes.So how is this newest boondogle a win win for those people?Perhaps those wards affected could have those losses covered by the rest of the city.Although those people are not on the free ride ticket like the developers are,perhaps gift exeptions could be made by another arms length organization and that way no clear accountability will be required.

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By seancb (registered) - website | Posted August 26, 2012 at 08:38:38

Only in Hamilton do we suffer fools who tout a casino as an economic driver and higher order transit as a money drain.

Once again the tightwads come crawling out of the woodwork because the word "transit" pops up. Where are all the scrooges hiding when aerotropolis rolls in? Or is that a billion dollars we can afford to spend?

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By Kiely (registered) | Posted August 26, 2012 at 21:33:57 in reply to Comment 80078

Where are all the scrooges hiding when aerotropolis rolls in?

Oh don't get me started, I get all "Stay off my lawn" with that shit. What a colossal waste of money and land.

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